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Share Name | Share Symbol | Market | Type |
---|---|---|---|
FleetCor Technologies Inc | NYSE:FLT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 303.26 | 0 | 01:00:00 |
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
72-1074903
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
5445 Triangle Parkway, Peachtree Corners, Georgia
|
|
30092
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
Emerging growth company
|
¨
|
|
|
Class
|
|
Outstanding at November 1, 2018
|
Common Stock, $0.001 par value
|
|
122,850,784
|
|
|
|
Page
|
PART I—FINANCIAL INFORMATION
|
||
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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||
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|
|
Item 2.
|
||
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|
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Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II—OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
September 30, 2018
1
|
|
December 31, 2017
|
||||
|
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
924,442
|
|
|
$
|
913,595
|
|
Restricted cash
|
|
264,108
|
|
|
217,275
|
|
||
Accounts and other receivables (less allowance for doubtful accounts of $52,022 at September 30, 2018 and $46,031 at December 31, 2017)
|
|
1,811,339
|
|
|
1,420,011
|
|
||
Securitized accounts receivable—restricted for securitization investors
|
|
931,000
|
|
|
811,000
|
|
||
Prepaid expenses and other current assets
|
|
202,102
|
|
|
187,820
|
|
||
Total current assets
|
|
4,132,991
|
|
|
3,549,701
|
|
||
Property and equipment, net
|
|
184,979
|
|
|
180,057
|
|
||
Goodwill
|
|
4,517,348
|
|
|
4,715,823
|
|
||
Other intangibles, net
|
|
2,438,627
|
|
|
2,724,957
|
|
||
Investments
|
|
33,032
|
|
|
32,859
|
|
||
Other assets
|
|
143,913
|
|
|
114,962
|
|
||
Total assets
|
|
$
|
11,450,890
|
|
|
$
|
11,318,359
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
1,616,949
|
|
|
$
|
1,437,314
|
|
Accrued expenses
|
|
252,069
|
|
|
238,472
|
|
||
Customer deposits
|
|
825,371
|
|
|
732,171
|
|
||
Securitization facility
|
|
931,000
|
|
|
811,000
|
|
||
Current portion of notes payable and lines of credit
|
|
768,548
|
|
|
805,512
|
|
||
Other current liabilities
|
|
90,531
|
|
|
71,033
|
|
||
Total current liabilities
|
|
4,484,468
|
|
|
4,095,502
|
|
||
Notes payable and other obligations, less current portion
|
|
2,773,378
|
|
|
2,902,104
|
|
||
Deferred income taxes
|
|
506,310
|
|
|
518,912
|
|
||
Other noncurrent liabilities
|
|
124,486
|
|
|
125,319
|
|
||
Total noncurrent liabilities
|
|
3,404,174
|
|
|
3,546,335
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock, $0.001 par value; 475,000,000 shares authorized; 122,823,669 shares issued and 88,648,486 shares outstanding at September 30, 2018; and 122,083,059 shares issued and 89,803,982 shares outstanding at December 31, 2017
|
|
123
|
|
|
122
|
|
||
Additional paid-in capital
|
|
2,316,753
|
|
|
2,214,224
|
|
||
Retained earnings
|
|
3,515,657
|
|
|
2,958,921
|
|
||
Accumulated other comprehensive loss
|
|
(944,746
|
)
|
|
(551,857
|
)
|
||
Less treasury stock (34,175,183 shares at September 30, 2018 and 32,279,077 shares at December 31, 2017)
|
|
(1,325,539
|
)
|
|
(944,888
|
)
|
||
Total stockholders’ equity
|
|
3,562,248
|
|
|
3,676,522
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
11,450,890
|
|
|
$
|
11,318,359
|
|
1
Reflects the impact of the Company's adoption of Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606") and related cost capitalization guidance, which was adopted by the Company on January 1, 2018 using the modified retrospective transition method. The adoption of ASC 606 resulted in an adjustment to retained earnings in our consolidated balance sheet for the cumulative effect of applying the standard, which included costs incurred to obtain a contract, as well as presentation changes in our statements of income, including the classification of certain amounts previously classified as merchant commissions and processing expense net with revenues. As a result of the application of the modified retrospective transition method, the Company's prior period results within its annual report on Form 10-K and quarterly reports on Form 10-Q will not be restated to reflect the impact of ASC 606. See footnote 1, "Summary of Significant Accounting Policies", in the accompanying notes to the unaudited consolidated financial statements.
|
See accompanying notes to unaudited consolidated financial statements.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018¹
|
|
2017
|
|
2018¹
|
|
2017
|
||||||||
Revenues, net
|
|
$
|
619,586
|
|
|
$
|
577,877
|
|
|
$
|
1,790,070
|
|
|
$
|
1,639,547
|
|
Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Merchant commissions
|
|
—
|
|
|
27,687
|
|
|
—
|
|
|
82,690
|
|
||||
Processing
|
|
128,400
|
|
|
111,283
|
|
|
356,086
|
|
|
316,429
|
|
||||
Selling
|
|
44,806
|
|
|
45,060
|
|
|
135,926
|
|
|
122,854
|
|
||||
General and administrative
|
|
98,023
|
|
|
92,054
|
|
|
284,718
|
|
|
275,095
|
|
||||
Depreciation and amortization
|
|
67,267
|
|
|
69,156
|
|
|
207,379
|
|
|
198,731
|
|
||||
Operating income
|
|
281,090
|
|
|
232,637
|
|
|
805,961
|
|
|
643,748
|
|
||||
Investment loss
|
|
7,147
|
|
|
47,766
|
|
|
7,147
|
|
|
52,497
|
|
||||
Other expense (income), net
|
|
303
|
|
|
(175,271
|
)
|
|
465
|
|
|
(173,626
|
)
|
||||
Interest expense, net
|
|
36,072
|
|
|
29,344
|
|
|
100,287
|
|
|
76,322
|
|
||||
Loss on extinguishment of debt
|
|
—
|
|
|
3,296
|
|
|
—
|
|
|
3,296
|
|
||||
Total other expense (income)
|
|
43,522
|
|
|
(94,865
|
)
|
|
107,899
|
|
|
(41,511
|
)
|
||||
Income before income taxes
|
|
237,568
|
|
|
327,502
|
|
|
698,062
|
|
|
685,259
|
|
||||
Provision for income taxes
|
|
79,874
|
|
|
124,679
|
|
|
188,579
|
|
|
227,756
|
|
||||
Net income
|
|
$
|
157,694
|
|
|
$
|
202,823
|
|
|
$
|
509,483
|
|
|
$
|
457,503
|
|
Basic earnings per share
|
|
$
|
1.78
|
|
|
$
|
2.23
|
|
|
$
|
5.72
|
|
|
$
|
4.99
|
|
Diluted earnings per share
|
|
$
|
1.71
|
|
|
$
|
2.18
|
|
|
$
|
5.50
|
|
|
$
|
4.87
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic shares
|
|
88,456
|
|
|
90,751
|
|
|
89,126
|
|
|
91,619
|
|
||||
Diluted shares
|
|
92,081
|
|
|
93,001
|
|
|
92,671
|
|
|
93,923
|
|
1
Reflects the impact of the Company's adoption of ASC 606 and related cost capitalization guidance, which was adopted by the Company on January 1, 2018 using the modified retrospective transition method. The adoption of ASC 606 resulted in an adjustment to retained earnings in our consolidated balance sheet for the cumulative effect of applying the standard, which included costs incurred to obtain a contract, as well as presentation changes in our statements of income, including the classification of certain amounts previously classified as merchant commissions and processing expense net with revenues. As a result of the application of the modified retrospective transition method, the Company's prior period results within its annual report on Form 10-K and quarterly reports on Form 10-Q will not be restated to reflect the impact of ASC 606. See footnote 1, "Summary of Significant Accounting Policies", in the accompanying notes to the unaudited consolidated financial statements.
|
See accompanying notes to unaudited consolidated financial statements.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
157,694
|
|
|
$
|
202,823
|
|
|
$
|
509,483
|
|
|
$
|
457,503
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
||||||||||
Foreign currency translation (losses) gains, net of tax
|
|
(74,058
|
)
|
|
112,301
|
|
|
(392,889
|
)
|
|
168,655
|
|
||||
Reclassification of foreign currency translation loss to investment, net of tax
|
|
—
|
|
|
31,381
|
|
|
—
|
|
|
31,381
|
|
||||
Total other comprehensive (loss) income
|
|
(74,058
|
)
|
|
143,682
|
|
|
(392,889
|
)
|
|
200,036
|
|
||||
Total comprehensive income
|
|
$
|
83,636
|
|
|
$
|
346,505
|
|
|
$
|
116,594
|
|
|
$
|
657,539
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2018¹
|
|
2017¹
|
||||
Operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
509,483
|
|
|
$
|
457,503
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation
|
|
38,174
|
|
|
35,096
|
|
||
Stock-based compensation
|
|
54,207
|
|
|
68,897
|
|
||
Provision for losses on accounts receivable
|
|
43,520
|
|
|
35,949
|
|
||
Amortization of deferred financing costs and discounts
|
|
4,035
|
|
|
5,411
|
|
||
Amortization of intangible assets
|
|
165,002
|
|
|
158,897
|
|
||
Amortization of premium on receivables
|
|
4,202
|
|
|
4,738
|
|
||
Loss on extinguishment of debt
|
|
—
|
|
|
3,296
|
|
||
Deferred income taxes
|
|
(6,334
|
)
|
|
(38,092
|
)
|
||
Investment loss
|
|
7,147
|
|
|
52,497
|
|
||
Gain on disposition of business
|
|
—
|
|
|
(174,984
|
)
|
||
Other non-cash operating income
|
|
(140
|
)
|
|
(49
|
)
|
||
Changes in operating assets and liabilities (net of acquisitions):
|
|
|
|
|
||||
Accounts and other receivables
|
|
(640,859
|
)
|
|
(440,011
|
)
|
||
Prepaid expenses and other current assets
|
|
(19,618
|
)
|
|
(86,648
|
)
|
||
Other assets
|
|
(19,922
|
)
|
|
(15,378
|
)
|
||
Accounts payable, accrued expenses and customer deposits
|
|
416,483
|
|
|
364,473
|
|
||
Net cash provided by operating activities
|
|
555,380
|
|
|
431,595
|
|
||
Investing activities
|
|
|
|
|
||||
Acquisitions, net of cash acquired
|
|
(3,799
|
)
|
|
(602,298
|
)
|
||
Purchases of property and equipment
|
|
(56,312
|
)
|
|
(49,459
|
)
|
||
Proceeds from disposal of a business
|
|
—
|
|
|
316,501
|
|
||
Other
|
|
(11,192
|
)
|
|
(6,327
|
)
|
||
Net cash used in investing activities
|
|
(71,303
|
)
|
|
(341,583
|
)
|
||
Financing activities
|
|
|
|
|
||||
Proceeds from issuance of common stock
|
|
48,322
|
|
|
20,192
|
|
||
Repurchase of common stock
|
|
(380,651
|
)
|
|
(402,392
|
)
|
||
Borrowings on securitization facility, net
|
|
120,000
|
|
|
203,000
|
|
||
Deferred financing costs paid and debt discount
|
|
(166
|
)
|
|
(11,230
|
)
|
||
Proceeds from issuance of notes payable
|
|
—
|
|
|
780,656
|
|
||
Principal payments on notes payable
|
|
(103,500
|
)
|
|
(388,656
|
)
|
||
Borrowings from revolver
|
|
834,019
|
|
|
845,000
|
|
||
Payments on revolver
|
|
(897,861
|
)
|
|
(804,808
|
)
|
||
Borrowings on swing line of credit, net
|
|
23,735
|
|
|
7,800
|
|
||
Other
|
|
(230
|
)
|
|
537
|
|
||
Net cash (used in) provided by financing activities
|
|
(356,332
|
)
|
|
250,099
|
|
||
Effect of foreign currency exchange rates on cash
|
|
(70,065
|
)
|
|
34,390
|
|
||
Net increase in cash and cash equivalents and restricted cash
|
|
57,680
|
|
|
374,501
|
|
||
Cash and cash equivalents and restricted cash, beginning of period
|
|
1,130,870
|
|
|
643,770
|
|
||
Cash and cash equivalents and restricted cash, end of period
|
|
$
|
1,188,550
|
|
|
$
|
1,018,271
|
|
Supplemental cash flow information
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
113,785
|
|
|
$
|
79,144
|
|
Cash paid for income taxes
|
|
$
|
162,563
|
|
|
$
|
257,349
|
|
1
Reflects the impact of the Company's adoption of Accounting Standards Update 2016-18, "Statement of Cash Flows (Topic 230)", which was adopted by the Company on January 1, 2018 and applied retrospectively to results for 2017. The adoption of Topic 230 resulted in the statement of cash flows presenting the changes in the total of cash, cash equivalents and restricted cash. As a result, the Company will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows.
|
See accompanying notes to unaudited consolidated financial statements.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
|
2018 As Reported
|
|
Impact of ASC 606
|
|
2018 Prior to Adoption
|
|
2018 As Reported
|
|
Impact of ASC 606
|
|
2018 Prior to Adoption
|
||||||||||||
Revenues, net
|
|
$
|
619,586
|
|
|
$
|
27,958
|
|
|
$
|
647,544
|
|
|
$
|
1,790,070
|
|
|
$
|
75,513
|
|
|
$
|
1,865,583
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Merchant commissions
|
|
—
|
|
|
30,909
|
|
|
30,909
|
|
|
—
|
|
|
84,199
|
|
|
84,199
|
|
||||||
Processing
|
|
128,400
|
|
|
(2,498
|
)
|
|
125,902
|
|
|
356,086
|
|
|
(7,282
|
)
|
|
348,804
|
|
||||||
Selling
|
|
44,806
|
|
|
875
|
|
|
45,681
|
|
|
135,926
|
|
|
3,392
|
|
|
139,318
|
|
||||||
General and administrative
|
|
98,023
|
|
|
—
|
|
|
98,023
|
|
|
284,718
|
|
|
—
|
|
|
284,718
|
|
||||||
Depreciation and amortization
|
|
67,267
|
|
|
—
|
|
|
67,267
|
|
|
207,379
|
|
|
—
|
|
|
207,379
|
|
||||||
Operating income
|
|
281,090
|
|
|
(1,328
|
)
|
|
279,762
|
|
|
805,961
|
|
|
(4,796
|
)
|
|
801,165
|
|
||||||
Total other expense
|
|
43,522
|
|
|
—
|
|
|
43,522
|
|
|
107,899
|
|
|
—
|
|
|
107,899
|
|
||||||
Income before income taxes
|
|
237,568
|
|
|
(1,328
|
)
|
|
236,240
|
|
|
698,062
|
|
|
(4,796
|
)
|
|
693,266
|
|
||||||
Provision for income taxes
|
|
79,874
|
|
|
(498
|
)
|
|
79,376
|
|
|
188,579
|
|
|
(1,346
|
)
|
|
187,233
|
|
||||||
Net income
|
|
$
|
157,694
|
|
|
$
|
(830
|
)
|
|
$
|
156,864
|
|
|
$
|
509,483
|
|
|
$
|
(3,450
|
)
|
|
$
|
506,033
|
|
Basic earnings per share
|
|
$
|
1.78
|
|
|
$
|
(0.01
|
)
|
|
$
|
1.77
|
|
|
$
|
5.72
|
|
|
$
|
(0.04
|
)
|
|
$
|
5.68
|
|
Diluted earnings per share
|
|
$
|
1.71
|
|
|
$
|
(0.01
|
)
|
|
$
|
1.70
|
|
|
$
|
5.50
|
|
|
$
|
(0.04
|
)
|
|
$
|
5.46
|
|
Revenue, net by Product Category*
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2018
|
|
%
|
|
2018
|
|
%
|
||||||
Fuel
|
$
|
276
|
|
|
45
|
%
|
|
$
|
805
|
|
|
45
|
%
|
Corporate Payments
|
105
|
|
|
17
|
%
|
|
300
|
|
|
17
|
%
|
||
Tolls
|
78
|
|
|
13
|
%
|
|
250
|
|
|
14
|
%
|
||
Lodging
|
48
|
|
|
8
|
%
|
|
132
|
|
|
7
|
%
|
||
Gift
|
57
|
|
|
9
|
%
|
|
139
|
|
|
8
|
%
|
||
Other
|
56
|
|
|
9
|
%
|
|
164
|
|
|
9
|
%
|
||
Consolidated Revenues, net
|
$
|
620
|
|
|
100
|
%
|
|
$
|
1,790
|
|
|
100
|
%
|
Revenue, net by Geography*
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2018
|
|
%
|
|
2018
|
|
%
|
||||||
United States
|
$
|
391
|
|
|
63
|
%
|
|
1,082
|
|
|
60
|
%
|
|
Brazil
|
92
|
|
|
15
|
%
|
|
296
|
|
|
17
|
%
|
||
United Kingdom
|
63
|
|
|
10
|
%
|
|
192
|
|
|
11
|
%
|
||
Other
|
74
|
|
|
12
|
%
|
|
220
|
|
|
12
|
%
|
||
Consolidated Revenues, net
|
$
|
620
|
|
|
100
|
%
|
|
$
|
1,790
|
|
|
100
|
%
|
a.
|
The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.
|
b.
|
The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.
|
c.
|
The costs are expected to be recovered.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Gross domestic accounts receivable
|
|
$
|
951,331
|
|
|
$
|
661,677
|
|
Gross domestic securitized accounts receivable
|
|
931,000
|
|
|
811,000
|
|
||
Gross foreign receivables
|
|
912,030
|
|
|
804,365
|
|
||
Total gross receivables
|
|
2,794,361
|
|
|
2,277,042
|
|
||
Less allowance for doubtful accounts
|
|
(52,022
|
)
|
|
(46,031
|
)
|
||
Net accounts and securitized accounts receivable
|
|
$
|
2,742,339
|
|
|
$
|
2,231,011
|
|
|
|
2018
|
|
2017
|
||||
Allowance for doubtful accounts beginning of period
|
|
$
|
46,031
|
|
|
$
|
32,506
|
|
Provision for bad debts
|
|
43,520
|
|
|
35,949
|
|
||
Write-offs
|
|
(37,529
|
)
|
|
(20,676
|
)
|
||
Allowance for doubtful accounts end of period
|
|
$
|
52,022
|
|
|
$
|
47,779
|
|
•
|
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.
|
•
|
Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
|
•
|
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
|
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Repurchase agreements
|
|
$
|
526,730
|
|
|
$
|
—
|
|
|
$
|
526,730
|
|
|
$
|
—
|
|
Money market
|
|
50,395
|
|
|
—
|
|
|
50,395
|
|
|
—
|
|
||||
Certificates of deposit
|
|
172
|
|
|
—
|
|
|
172
|
|
|
—
|
|
||||
Foreign exchange contracts
|
|
28,293
|
|
|
—
|
|
|
28,293
|
|
|
—
|
|
||||
Total assets
|
|
$
|
605,590
|
|
|
$
|
—
|
|
|
$
|
605,590
|
|
|
$
|
—
|
|
Cash collateral for foreign exchange contracts
|
|
$
|
26,499
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
$
|
28,626
|
|
|
$
|
—
|
|
|
$
|
28,626
|
|
|
—
|
|
|
Total liabilities
|
|
$
|
28,626
|
|
|
$
|
—
|
|
|
$
|
28,626
|
|
|
$
|
—
|
|
Cash collateral obligation for foreign exchange contracts
|
|
$
|
12,307
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Repurchase agreements
|
|
$
|
420,838
|
|
|
$
|
—
|
|
|
$
|
420,838
|
|
|
$
|
—
|
|
Money market
|
|
50,423
|
|
|
—
|
|
|
50,423
|
|
|
—
|
|
||||
Certificates of deposit
|
|
7,417
|
|
|
—
|
|
|
7,417
|
|
|
—
|
|
||||
Foreign exchange contracts
|
|
39,045
|
|
|
10
|
|
|
39,035
|
|
|
—
|
|
||||
Total assets
|
|
$
|
517,723
|
|
|
$
|
10
|
|
|
$
|
517,713
|
|
|
$
|
—
|
|
Cash collateral for foreign exchange contracts
|
|
$
|
12,540
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
$
|
26,888
|
|
|
$
|
67
|
|
|
$
|
26,821
|
|
|
$
|
—
|
|
Total liabilities
|
|
$
|
26,888
|
|
|
$
|
67
|
|
|
$
|
26,821
|
|
|
$
|
—
|
|
Cash collateral obligation for foreign exchange contracts
|
|
$
|
10,882
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options
|
|
$
|
11,154
|
|
|
$
|
16,212
|
|
|
$
|
33,205
|
|
|
$
|
42,254
|
|
Restricted stock
|
|
9,548
|
|
|
8,443
|
|
|
21,002
|
|
|
26,643
|
|
||||
Stock-based compensation
|
|
$
|
20,702
|
|
|
$
|
24,655
|
|
|
$
|
54,207
|
|
|
$
|
68,897
|
|
|
|
Unrecognized
Compensation
Cost
|
|
Weighted Average
Period of Expense
Recognition
(in Years)
|
||
Stock options
|
|
$
|
68,687
|
|
|
1.41
|
Restricted stock
|
|
13,456
|
|
|
0.53
|
|
Total
|
|
$
|
82,143
|
|
|
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Options
Exercisable
at End of
Period
|
|
Weighted
Average
Exercise
Price of
Exercisable
Options
|
|
Weighted
Average Fair
Value of
Options
Granted
During the Period
|
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding at December 31, 2017
|
|
8,031
|
|
|
$
|
109.78
|
|
|
4,029
|
|
|
$
|
75.80
|
|
|
|
|
$
|
663,815
|
|
||
Granted
|
|
408
|
|
|
204.57
|
|
|
|
|
|
|
$
|
50.04
|
|
|
|
||||||
Exercised
|
|
(692
|
)
|
|
71.50
|
|
|
|
|
|
|
|
|
108,164
|
|
|||||||
Forfeited
|
|
(40
|
)
|
|
149.22
|
|
|
|
|
|
|
|
|
|
||||||||
Outstanding at September 30, 2018
|
|
7,707
|
|
|
$
|
118.03
|
|
|
4,588
|
|
|
$
|
91.27
|
|
|
|
|
$
|
846,395
|
|
||
Expected to vest as of September 30, 2018
|
|
7,707
|
|
|
$
|
118.03
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
||||
|
|
2018
|
|
2017
|
||
Risk-free interest rate
|
|
2.57
|
%
|
|
1.65
|
%
|
Dividend yield
|
|
—
|
|
|
—
|
|
Expected volatility
|
|
26.93
|
%
|
|
28.02
|
%
|
Expected life (in years)
|
|
3.8
|
|
|
3.4
|
|
|
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2017
|
|
365
|
|
|
$
|
155.58
|
|
Granted
|
|
104
|
|
|
190.18
|
|
|
Vested
|
|
(49
|
)
|
|
157.66
|
|
|
Canceled or forfeited
|
|
(26
|
)
|
|
157.39
|
|
|
Outstanding at September 30, 2018
|
|
394
|
|
|
$
|
173.21
|
|
Restricted cash
|
$
|
37,666
|
|
Trade and other receivables
|
61,806
|
|
|
Prepaid expenses and other
|
18,071
|
|
|
Property and equipment
|
7,106
|
|
|
Other long term assets
|
10,025
|
|
|
Goodwill
|
500,212
|
|
|
Customer relationships and other identifiable intangible assets
|
271,793
|
|
|
Liabilities assumed
|
(197,335
|
)
|
|
Deferred tax liabilities
|
(93,364
|
)
|
|
Aggregate purchase price
|
$
|
615,980
|
|
|
|
|
Useful Lives (in Years)
|
Value
|
||
Banking relationships
|
20
|
$
|
705
|
|
Trade name and trademarks
|
Indefinite
|
35,110
|
|
|
Technology
|
5
|
16,039
|
|
|
Customer relationships - excluding Accounts Payable Solutions
|
7-18
|
178,190
|
|
|
Customer relationships - Accounts Payable Solutions
|
20
|
41,749
|
|
|
|
|
$
|
271,793
|
|
Trade and other receivables
|
$
|
38,038
|
|
Prepaid expenses and other
|
1,426
|
|
|
Property and equipment
|
5,745
|
|
|
Goodwill
|
59,946
|
|
|
Other intangible assets
|
53,459
|
|
|
Liabilities assumed
|
(32,274
|
)
|
|
Deferred tax liabilities
|
(17,217
|
)
|
|
Aggregate purchase prices
|
$
|
109,123
|
|
|
Useful Lives (in Years)
|
Value
|
||
Trade name and trademarks
|
1
|
$
|
180
|
|
Technology
|
4
|
1,750
|
|
|
Customer relationships
|
8
|
51,529
|
|
|
|
|
$
|
53,459
|
|
|
|
December 31, 2017
|
|
Acquisition Accounting
Adjustments
|
|
Foreign
Currency
|
|
September 30, 2018
|
||||||||
Segment
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
3,084,123
|
|
|
$
|
4,036
|
|
|
$
|
(7,152
|
)
|
|
$
|
3,081,007
|
|
International
|
|
1,631,700
|
|
|
20
|
|
|
(195,379
|
)
|
|
1,436,341
|
|
||||
|
|
$
|
4,715,823
|
|
|
$
|
4,056
|
|
|
$
|
(202,531
|
)
|
|
$
|
4,517,348
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Weighted-
Avg
Useful
Lives
(Years)
|
|
Gross
Carrying
Amounts
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amounts
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Customer and vendor relationships
|
|
17.1
|
|
$
|
2,609,056
|
|
|
$
|
(734,726
|
)
|
|
$
|
1,874,330
|
|
|
$
|
2,698,428
|
|
|
$
|
(605,347
|
)
|
|
$
|
2,093,081
|
|
Trade names and trademarks—indefinite lived
|
|
N/A
|
|
476,820
|
|
|
—
|
|
|
476,820
|
|
|
499,587
|
|
|
—
|
|
|
499,587
|
|
||||||
Trade names and trademarks—other
|
|
13.8
|
|
2,963
|
|
|
(2,457
|
)
|
|
506
|
|
|
2,986
|
|
|
(2,207
|
)
|
|
779
|
|
||||||
Software
|
|
5.9
|
|
212,288
|
|
|
(144,880
|
)
|
|
67,408
|
|
|
219,019
|
|
|
(116,654
|
)
|
|
102,365
|
|
||||||
Non-compete agreements
|
|
4.2
|
|
45,786
|
|
|
(26,223
|
)
|
|
19,563
|
|
|
48,221
|
|
|
(19,076
|
)
|
|
29,145
|
|
||||||
Total other intangibles
|
|
|
|
$
|
3,346,913
|
|
|
$
|
(908,286
|
)
|
|
$
|
2,438,627
|
|
|
$
|
3,468,241
|
|
|
$
|
(743,284
|
)
|
|
$
|
2,724,957
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Term notes payable—domestic(a), net of discounts
|
|
$
|
2,892,205
|
|
|
$
|
2,993,667
|
|
Revolving line of credit A Facility—domestic(a)
|
|
440,000
|
|
|
635,000
|
|
||
Revolving line of credit B Facility—foreign(a)
|
|
140,717
|
|
|
28,334
|
|
||
Revolving line of credit B Facility—swing line(a)
|
|
29,407
|
|
|
6,879
|
|
||
Other debt(c)
|
|
39,597
|
|
|
43,736
|
|
||
Total notes payable and other obligations
|
|
3,541,926
|
|
|
3,707,616
|
|
||
Securitization Facility(b)
|
|
931,000
|
|
|
811,000
|
|
||
Total notes payable, credit agreements and Securitization Facility
|
|
$
|
4,472,926
|
|
|
$
|
4,518,616
|
|
Current portion
|
|
$
|
1,699,548
|
|
|
$
|
1,616,512
|
|
Long-term portion
|
|
2,773,378
|
|
|
2,902,104
|
|
||
Total notes payable, credit agreements and Securitization Facility
|
|
$
|
4,472,926
|
|
|
$
|
4,518,616
|
|
(a)
|
The Company has a Credit Agreement, which has been amended multiple times, most recently on August 30, 2018, and provides for senior secured credit facilities consisting of a revolving A credit facility (Revolver) in the amount of
$1.285 billion
, a term loan A facility in the amount of
$2.69 billion
and a term loan B facility in the amount of
$350 million
as of September 30, 2018. The revolving credit facility consists of (a) a revolving A credit facility in the amount of
$800 million
, with sublimits for letters of credit and swing line loans, (b) a revolving B facility in the amount of
$450 million
for swing line loans and multi-currency borrowings and, (c) a revolving C facility in the amount of
$35 million
for multi-currency borrowings in Australian Dollars or New Zealand Dollars. The Credit Agreement also includes an accordion feature for borrowing an additional
$750 million
in term A, term B, revolver A or revolver B debt. Proceeds from the credit facilities may be used for working capital purposes, acquisitions, and other general corporate purposes. The maturity dates are
August 2, 2022
for term A loan, revolving loans, and letters of credit under the Credit Agreement and
August 2, 2024
for the term B loan.
|
(b)
|
The Company is party to a
$1.2 billion
receivables purchase agreement (Securitization Facility) that was amended on August 30, 2018. There is a program fee equal to
one month LIBOR
plus
0.90%
or the Commercial Paper Rate plus
0.80%
. The program fee was
2.28%
plus
0.87%
as of
September 30, 2018
and
1.55%
plus
0.86%
as of
December 31, 2017
. The unused facility fee is payable at a rate of
0.40%
per annum as of
September 30, 2018
and
December 31, 2017
. The Company has unamortized debt issuance costs of
$1.4 million
related to the Securitization Facility as of
September 30, 2018
recorded within other assets in the consolidated balance sheet.
|
(c)
|
Other debt includes the long-term portion of deferred payments associated with business acquisitions.
|
|
|
2018
|
|
2017
|
||||||||||
Computed tax expense at the U.S. federal tax rate
|
|
$
|
49,889
|
|
|
21.0
|
%
|
|
$
|
114,626
|
|
|
35.0
|
%
|
Changes resulting from:
|
|
|
|
|
|
|
|
|
||||||
Foreign income tax differential
|
|
2,359
|
|
|
1.0
|
%
|
|
(9,247
|
)
|
|
(2.8
|
)%
|
||
Excess tax benefits related to stock-based compensation
|
|
(7,562
|
)
|
|
(3.2
|
)%
|
|
(4,360
|
)
|
|
(1.3
|
)%
|
||
State taxes net of federal benefits
|
|
3,119
|
|
|
1.3
|
%
|
|
5,926
|
|
|
1.8
|
%
|
||
Foreign-sourced nontaxable income
|
|
(5,620
|
)
|
|
(2.4
|
)%
|
|
1,558
|
|
|
0.5
|
%
|
||
Foreign withholding taxes
1
|
|
4,578
|
|
|
1.9
|
%
|
|
3,065
|
|
|
0.9
|
%
|
||
GILTI tax, net of foreign tax credits
|
|
5,576
|
|
|
2.4
|
%
|
|
—
|
|
|
—
|
%
|
||
Valuation allowance on investment loss
|
|
—
|
|
|
—
|
%
|
|
16,718
|
|
|
5.1
|
%
|
||
Transition tax, net of foreign tax credits
|
|
22,731
|
|
|
9.6
|
%
|
|
—
|
|
|
—
|
%
|
||
Other
1
|
|
4,804
|
|
|
2.0
|
%
|
|
(3,607
|
)
|
|
(1.1
|
)%
|
||
Provision for income taxes
|
|
$
|
79,874
|
|
|
33.6
|
%
|
|
$
|
124,679
|
|
|
38.1
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
157,694
|
|
|
$
|
202,823
|
|
|
$
|
509,483
|
|
|
$
|
457,503
|
|
Denominator for basic earnings per share
|
|
88,456
|
|
|
90,751
|
|
|
89,126
|
|
|
91,619
|
|
||||
Dilutive securities
|
|
3,625
|
|
|
2,250
|
|
|
3,545
|
|
|
2,304
|
|
||||
Denominator for diluted earnings per share
|
|
92,081
|
|
|
93,001
|
|
|
92,671
|
|
|
93,923
|
|
||||
Basic earnings per share
|
|
$
|
1.78
|
|
|
$
|
2.23
|
|
|
$
|
5.72
|
|
|
$
|
4.99
|
|
Diluted earnings per share
|
|
$
|
1.71
|
|
|
$
|
2.18
|
|
|
$
|
5.50
|
|
|
$
|
4.87
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
2
|
|
2018
|
|
2017
2
|
||||||||
Revenues, net:
1
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
412,816
|
|
|
$
|
368,006
|
|
|
$
|
1,148,034
|
|
|
$
|
1,040,949
|
|
International
|
|
206,770
|
|
|
209,871
|
|
|
642,036
|
|
|
598,598
|
|
||||
|
|
$
|
619,586
|
|
|
$
|
577,877
|
|
|
$
|
1,790,070
|
|
|
$
|
1,639,547
|
|
Operating income:
1
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
177,769
|
|
|
$
|
138,480
|
|
|
$
|
495,095
|
|
|
$
|
394,378
|
|
International
|
|
103,321
|
|
|
94,157
|
|
|
310,866
|
|
|
249,370
|
|
||||
|
|
$
|
281,090
|
|
|
$
|
232,637
|
|
|
$
|
805,961
|
|
|
$
|
643,748
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
39,049
|
|
|
$
|
38,399
|
|
|
$
|
116,041
|
|
|
$
|
104,960
|
|
International
|
|
28,218
|
|
|
30,757
|
|
|
91,338
|
|
|
93,771
|
|
||||
|
|
$
|
67,267
|
|
|
$
|
69,156
|
|
|
$
|
207,379
|
|
|
$
|
198,731
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
12,604
|
|
|
$
|
9,167
|
|
|
$
|
32,700
|
|
|
$
|
30,901
|
|
International
|
|
9,094
|
|
|
7,692
|
|
|
23,612
|
|
|
18,558
|
|
||||
|
|
$
|
21,698
|
|
|
$
|
16,859
|
|
|
$
|
56,312
|
|
|
$
|
49,459
|
|
•
|
Forward contracts
, which are commitments to buy or sell at a future date a currency at a contract price and will be settled in cash.
|
•
|
Option contracts,
which gives the purchaser, the right, but not the obligation to buy or sell within a specified time a currency at a contracted price that may be settled in cash.
|
•
|
Swap contracts,
which are commitments to settlement in cash at a future date or dates, usually on an overnight basis.
|
|
Notional
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Foreign exchange contracts:
|
|
|
|
||||
Swaps
|
$
|
330.4
|
|
|
$
|
515.4
|
|
Futures, forwards and spot
|
2,905.7
|
|
|
3,274.5
|
|
||
Written options
|
3,033.1
|
|
|
2,934.2
|
|
||
Purchased options
|
2,435.8
|
|
|
2,314.1
|
|
||
Total
|
$
|
8,705.0
|
|
|
$
|
9,038.1
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Fair Value, Gross
|
|
Fair Value, Net
|
|
Fair Value, Gross
|
|
Fair Value, Net
|
||||||||||||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
Derivatives - undesignated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Over the counter
|
$
|
75.3
|
|
|
$
|
75.6
|
|
|
$
|
28.3
|
|
|
$
|
28.6
|
|
|
$
|
80.4
|
|
|
$
|
68.2
|
|
|
$
|
39.0
|
|
|
$
|
26.8
|
|
Exchange traded
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||||||
Foreign exchange contracts
|
75.3
|
|
|
75.6
|
|
|
28.3
|
|
|
28.6
|
|
|
80.4
|
|
|
68.3
|
|
|
39.0
|
|
|
26.9
|
|
||||||||
Cash collateral
|
26.5
|
|
|
12.3
|
|
|
26.5
|
|
|
12.3
|
|
|
12.5
|
|
|
10.9
|
|
|
12.5
|
|
|
10.9
|
|
||||||||
Total net derivative assets and liabilities
|
$
|
48.8
|
|
|
$
|
63.3
|
|
|
$
|
1.8
|
|
|
$
|
16.3
|
|
|
$
|
67.9
|
|
|
$
|
57.4
|
|
|
$
|
26.5
|
|
|
$
|
16.0
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
|
2018
|
|
2017
1
|
|
2018
|
|
2017
1
|
||||||||||||||||||||
(Unaudited)
|
|
Revenues, net
|
|
% of
total revenues, net |
|
Revenues, net
|
|
% of
total revenues, net |
|
Revenues, net
|
|
% of
total revenues, net |
|
Revenues, net
|
|
% of
total revenues, net |
||||||||||||
North America
|
|
$
|
412.8
|
|
|
66.6
|
%
|
|
$
|
368.0
|
|
|
63.7
|
%
|
|
$
|
1,148.0
|
|
|
64.1
|
%
|
|
$
|
1,040.9
|
|
|
63.5
|
%
|
International
|
|
206.8
|
|
|
33.4
|
%
|
|
209.9
|
|
|
36.3
|
%
|
|
642.0
|
|
|
35.9
|
%
|
|
598.6
|
|
|
36.5
|
%
|
||||
|
|
$
|
619.6
|
|
|
100.0
|
%
|
|
$
|
577.9
|
|
|
100.0
|
%
|
|
$
|
1,790.1
|
|
|
100.0
|
%
|
|
$
|
1,639.5
|
|
|
100.0
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues, net
|
|
$
|
619.6
|
|
|
$
|
577.9
|
|
|
$
|
1,790.1
|
|
|
$
|
1,639.5
|
|
Net income
|
|
$
|
157.7
|
|
|
$
|
202.8
|
|
|
$
|
509.5
|
|
|
$
|
457.5
|
|
Net income per diluted share
|
|
$
|
1.71
|
|
|
$
|
2.18
|
|
|
$
|
5.50
|
|
|
$
|
4.87
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Adjusted net income
|
|
$
|
246.6
|
|
|
$
|
202.8
|
|
|
$
|
717.9
|
|
|
$
|
574.8
|
|
Adjusted net income per diluted share
|
|
$
|
2.68
|
|
|
$
|
2.18
|
|
|
$
|
7.75
|
|
|
$
|
6.12
|
|
Illustrative Merchant Payment Models
|
|||||||||||||||||
|
i) Cost Plus Mark-up:
|
|
ii) Percentage Discount:
|
|
iii) Fixed Fee:
|
||||||||||||
|
Wholesale Cost
|
|
$
|
2.86
|
|
|
Retail Price
|
|
$
|
3.00
|
|
|
Retail Price
|
|
$
|
3.00
|
|
|
Mark-up
|
|
0.05
|
|
|
Discount (3%)
|
|
(0.09
|
)
|
|
Fixed Fee
|
|
(0.09
|
)
|
|||
|
Price Paid to Merchant
|
|
$
|
2.91
|
|
|
Price Paid to Merchant
|
|
$
|
2.91
|
|
|
Price Paid to Merchant
|
|
$
|
2.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
||||||||||||
(Unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||||
Transactions (in millions)
|
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
380.8
|
|
|
398.4
|
|
|
1,257.5
|
|
|
1,256.9
|
|
1
|
||||
International
2
|
|
277.8
|
|
|
275.9
|
|
|
810.6
|
|
|
806.1
|
|
|
||||
Total transactions
|
|
658.6
|
|
|
674.3
|
|
|
2,068.1
|
|
|
2,062.9
|
|
|
||||
Revenue per transaction
|
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
1.08
|
|
|
$
|
0.92
|
|
|
$
|
0.91
|
|
|
$
|
0.83
|
|
|
International
|
|
0.74
|
|
|
0.76
|
|
|
0.79
|
|
|
0.74
|
|
|
||||
Consolidated revenue per transaction
|
|
0.94
|
|
|
0.86
|
|
|
0.87
|
|
|
0.79
|
|
|
1
For purposes of comparability, reflects adjustment for 44.3 million non-recurring transactions at SVS in the first quarter of 2017 due to system driven balance inquiries.
|
2
Reflects adjustments from previously disclosed amounts for the prior period to conform to current presentation.
|
|
|
As Reported
|
|
Pro Forma and Macro Adjusted
|
||||||||||||||||||||||||||
|
|
Three Months Ended September 30,
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||||||
(Unaudited)*
|
|
2018¹
|
|
2017
|
|
Change
|
|
% Change
|
|
2018¹
|
|
2017¹
|
|
Change
|
|
% Change
|
||||||||||||||
FUEL
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
|
|
122.9
|
|
|
119.3
|
|
|
3.6
|
|
|
3
|
%
|
|
122.9
|
|
|
121.1
|
|
|
1.9
|
|
|
2
|
%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
2.25
|
|
|
$
|
2.32
|
|
|
$
|
(0.07
|
)
|
|
(3
|
)%
|
|
$
|
2.15
|
|
|
$
|
2.07
|
|
|
$
|
0.08
|
|
|
4
|
%
|
'
- Revenues, net
|
|
$
|
276.0
|
|
|
$
|
276.2
|
|
|
$
|
(0.3
|
)
|
|
—
|
%
|
|
$
|
263.8
|
|
|
$
|
250.5
|
|
|
$
|
13.3
|
|
|
5
|
%
|
CORPORATE PAYMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
|
|
13.1
|
|
|
10.9
|
|
|
2.2
|
|
|
20
|
%
|
|
13.1
|
|
|
11.1
|
|
|
2.0
|
|
|
18
|
%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
8.05
|
|
|
$
|
6.63
|
|
|
$
|
1.42
|
|
|
21
|
%
|
|
$
|
8.10
|
|
|
$
|
7.52
|
|
|
$
|
0.59
|
|
|
8
|
%
|
'
- Revenues, net
|
|
$
|
105.5
|
|
|
$
|
72.2
|
|
|
$
|
33.3
|
|
|
46
|
%
|
|
$
|
106.2
|
|
|
$
|
83.2
|
|
|
$
|
23.0
|
|
|
28
|
%
|
TOLLS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
2
|
|
221.9
|
|
|
226.1
|
|
|
(4.2
|
)
|
|
(2
|
)%
|
|
221.9
|
|
|
226.1
|
|
|
(4.2
|
)
|
|
(2
|
)%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
0.35
|
|
|
$
|
0.37
|
|
|
$
|
(0.02
|
)
|
|
(4
|
)%
|
|
$
|
0.44
|
|
|
$
|
0.37
|
|
|
$
|
0.07
|
|
|
19
|
%
|
'
- Revenues, net
|
|
$
|
77.8
|
|
|
$
|
82.9
|
|
|
$
|
(5.2
|
)
|
|
(6
|
)%
|
|
$
|
97.0
|
|
|
$
|
82.9
|
|
|
$
|
14.1
|
|
|
17
|
%
|
LODGING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
|
|
4.5
|
|
|
4.1
|
|
|
0.4
|
|
|
11
|
%
|
|
4.5
|
|
|
4.6
|
|
|
(0.1
|
)
|
|
(3
|
)%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
10.64
|
|
|
$
|
8.14
|
|
|
$
|
2.49
|
|
|
31
|
%
|
|
$
|
10.64
|
|
|
$
|
8.53
|
|
|
$
|
2.10
|
|
|
25
|
%
|
'
- Revenues, net
|
|
$
|
48.0
|
|
|
$
|
33.2
|
|
|
$
|
14.8
|
|
|
45
|
%
|
|
$
|
48.0
|
|
|
$
|
39.6
|
|
|
$
|
8.4
|
|
|
21
|
%
|
GIFT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
|
|
277.6
|
|
|
294.1
|
|
|
(16.5
|
)
|
|
(6
|
)%
|
|
277.6
|
|
|
294.1
|
|
|
(16.5
|
)
|
|
(6
|
)%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
$
|
0.02
|
|
|
10
|
%
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
$
|
0.02
|
|
|
10
|
%
|
'
- Revenues, net
|
|
$
|
56.7
|
|
|
$
|
54.8
|
|
|
$
|
1.9
|
|
|
4
|
%
|
|
$
|
56.7
|
|
|
$
|
54.8
|
|
|
$
|
1.9
|
|
|
4
|
%
|
OTHER
3,4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
|
|
18.6
|
|
|
19.7
|
|
|
(1.2
|
)
|
|
(6
|
)%
|
|
18.6
|
|
|
19.7
|
|
|
(1.1
|
)
|
|
(6
|
)%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
3.00
|
|
|
$
|
2.97
|
|
|
$
|
0.03
|
|
|
1
|
%
|
|
$
|
3.13
|
|
|
$
|
2.84
|
|
|
$
|
0.29
|
|
|
10
|
%
|
'
- Revenues, net
|
|
$
|
55.7
|
|
|
$
|
58.5
|
|
|
$
|
(2.9
|
)
|
|
(5
|
)%
|
|
$
|
58.1
|
|
|
$
|
55.8
|
|
|
$
|
2.3
|
|
|
4
|
%
|
FLEETCOR CONSOLIDATED REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
'
- Transactions
|
|
658.6
|
|
|
674.3
|
|
|
(15.7
|
)
|
|
(2
|
)%
|
|
658.6
|
|
|
676.7
|
|
|
(18.1
|
)
|
|
(3
|
)%
|
||||||
'
- Revenues, net per transaction
|
|
$
|
0.94
|
|
|
$
|
0.86
|
|
|
$
|
0.08
|
|
|
10
|
%
|
|
$
|
0.96
|
|
|
$
|
0.84
|
|
|
$
|
0.12
|
|
|
14
|
%
|
'
- Revenues, net
|
|
$
|
619.6
|
|
|
$
|
577.9
|
|
|
$
|
41.7
|
|
|
7
|
%
|
|
$
|
629.8
|
|
|
$
|
566.8
|
|
|
$
|
63.0
|
|
|
11
|
%
|
* Columns may not calculate due to rounding.
|
1
Reflects the impact of the Company's adoption of Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606") and related cost capitalization guidance, which was adopted by the Company on January 1, 2018 using the modified retrospective transition method. The adoption of ASC 606 resulted in an adjustment to retained earnings in our consolidated balance sheet for the cumulative effect of applying the standard, which included costs incurred to obtain a contract, as well as presentation changes in our statements of income, including the classification of certain amounts previously classified as merchant commissions and processing expense net with revenues. As a result of the application of the modified retrospective transition method, the Company's prior period results within its annual report on Form 10-K and quarterly reports on Form 10-Q will not be restated to reflect the impact of ASC 606. For purposes of comparability, 2017 has been recast and is reconciled to GAAP in the section entitled “Management’s Use of Non-GAAP Financial Measures”, which includes certain estimates and assumptions made by the Company for the impact of ASC 606 on 2017 revenues, as the Company did not apply a full retrospective adoption.
|
2
Reflects adjustments from previously disclosed amounts for the prior period to conform to current presentation.
|
3
Other includes telematics, maintenance, food, and transportation related businesses.
|
4
Fuel Cards product category further refined to Fuel, to reflect different ways that fuel is paid for by our customers and as a result, reflects immaterial reclassifications from previously disclosed amounts for the prior period.
|
•
|
Merchant commissions
—In certain of our card programs, we incur merchant commissions expense when we reimburse merchants with whom we have direct, contractual relationships for specific transactions where a customer purchases products or services from the merchant. In the card programs where it is paid, merchant commissions equal the difference between the price paid by us to the merchant and the merchant’s wholesale cost of the underlying products or services. The adoption of ASC 606 on January 1, 2018, resulted in a change in the presentation of amounts previously classified as merchant commissions, resulting in these amounts being recorded within revenues, net in periods beginning in 2018.
|
•
|
Processing
—Our processing expense consists of expenses related to processing transactions, servicing our customers and merchants, bad debt expense and cost of goods sold related to our hardware sales in certain businesses. Effective with the adoption of ASC 606 on January 1, 2018, certain third party processing expenses are netted with consolidated revenues, where the network is considered to be our customer.
|
•
|
Selling
—Our selling expenses consist primarily of wages, benefits, sales commissions (other than merchant commissions) and related expenses for our sales, marketing and account management personnel and activities.
|
•
|
General and administrative
—Our general and administrative expenses include compensation and related expenses (including stock-based compensation) for our executives, finance and accounting, information technology, human resources, legal and other administrative personnel. Also included are facilities expenses, third-party professional services fees, travel and entertainment expenses, and other corporate-level expenses.
|
•
|
Depreciation and amortization
—Our depreciation expenses include depreciation of property and equipment, consisting of computer hardware and software (including proprietary software development amortization expense), card-reading equipment, furniture, fixtures, vehicles and buildings and leasehold improvements related to office space. Our amortization expenses include amortization of intangible assets related to customer and vendor relationships, trade names and trademarks, software and non-compete agreements. We are amortizing intangible assets related to business acquisitions and certain private label contracts associated with the purchase of accounts receivable.
|
•
|
Other operating, net
—Our other operating, net includes other operating expenses and income items that do not relate to our core operations or that occur infrequently.
|
•
|
Investment loss
—Our investment results relate to our minority interest in Masternaut, a provider of telematics solutions to commercial fleets in Europe, which we historically accounted for using the equity method and recorded our share of earnings and losses. On September 30, 2017, we entered into an amended Masternaut investment agreement that resulted in the loss of significant influence, and we began accounting for the Masternaut investment by applying the cost method. Also includes impairment charges related to Masternaut and other cost method investments.
|
•
|
Other expense (income), net
—Our other expense (income), net includes proceeds/costs from the sale of assets, foreign currency transaction gains or losses and other miscellaneous operating costs and revenue.
|
•
|
Interest expense, net
—Our interest expense, net includes interest income on our cash balances and interest expense on our outstanding debt and on our Securitization Facility. We have historically invested our cash primarily in short-term money market funds.
|
•
|
Loss on extinguishment of debt
—Loss on extinguishment of debt relates to our write-off of debt issuance costs associated with the refinancing of our existing Credit Facility.
|
•
|
Provision for income taxes
—Our provision for income taxes consists primarily of corporate income taxes related to profits resulting from the sale of our products and services on a global basis.
|
•
|
Global economic conditions
—Our results of operations are materially affected by conditions in the economy generally, both in North America and internationally. Factors affected by the economy include our transaction volumes, the credit risk of our customers and changes in tax laws across the globe. These factors affected our businesses in both our North America and International segments.
|
•
|
Foreign currency changes
—Our results of operations are significantly impacted by changes in foreign currency rates; namely, by movements of the Australian dollar, Brazilian real, British pound, Canadian dollar, Czech koruna, Euro, Mexican peso, New Zealand dollar and Russian ruble, relative to the U.S. dollar. Approximately
60%
and
63%
of our revenue in the
nine
months ended
September 30, 2018
and
2017
, respectively, was derived in U.S. dollars and was not
|
•
|
Fuel prices
—Our fleet customers use our products and services primarily in connection with the purchase of fuel. Accordingly, our revenue is affected by fuel prices, which are subject to significant volatility. A change in retail fuel prices could cause a decrease or increase in our revenue from several sources, including fees paid to us based on a percentage of each customer’s total purchase. Changes in the absolute price of fuel may also impact unpaid account balances and the late fees and charges based on these amounts. See “Sources of Revenue” above for further information related to the absolute price of fuel.
|
•
|
Fuel-price spread volatility
—A portion of our revenue involves transactions where we derive revenue from fuel-price spreads, which is the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction. In these transactions, the price paid to the merchant is based on the wholesale cost of fuel. The merchant’s wholesale cost of fuel is dependent on several factors including, among others, the factors described above affecting fuel prices. The fuel price that we charge to our customer is dependent on several factors including, among others, the fuel price paid to the merchant, posted retail fuel prices and competitive fuel prices. We experience fuel-price spread contraction when the merchant’s wholesale cost of fuel increases at a faster rate than the fuel price we charge to our customers, or the fuel price we charge to our customers decreases at a faster rate than the merchant’s wholesale cost of fuel. See “Sources of Revenue” above for further information related to fuel-price spreads.
|
•
|
Acquisitions
—Since 2002, we have completed over 75 acquisitions of companies and commercial account portfolios. Acquisitions have been an important part of our growth strategy, and it is our intention to continue to seek opportunities to increase our customer base and diversify our service offering through further strategic acquisitions. The impact of acquisitions has, and may continue to have, a significant impact on our results of operations and may make it difficult to compare our results between periods.
|
•
|
Interest rates
—Our results of operations are affected by interest rates. We are exposed to market risk to changes in interest rates on our cash investments and debt.
|
•
|
Expenses
— Over the long term, we expect that our general and administrative expense will decrease as a percentage of revenue as our revenue increases. To support our expected revenue growth, we plan to continue to incur additional sales and marketing expense by investing in our direct marketing, third-party agents, internet marketing, telemarketing and field sales force.
|
•
|
Taxes
— We pay taxes in many different taxing jurisdictions, including the U.S., most U.S. states and many non-U.S. jurisdictions. The tax rates in certain non-U.S. taxing jurisdictions are higher than the U.S. tax rate. Consequently, as our earnings fluctuate between taxing jurisdictions, our effective tax rate fluctuates.
|
•
|
On August 9, 2017, we acquired Cambridge, a business to business (B2B) international payments provider, for approximately
$616.0 million
in cash, net of cash acquired of
$94.5 million
and inclusive of a note payable of
$23.8 million
. Cambridge processes B2B cross-border payments, assisting business clients in making international payments. The purpose of this acquisition is to further expand our corporate payments footprint.
|
•
|
On September 26, 2017, we acquired a fuel card provider in Russia.
|
•
|
On October 13, 2017, we completed the acquisition of CLS, a small lodging business, in the United States.
|
(Unaudited)
|
|
Three Months Ended June 30, 2018
1
|
|
% of total
revenue
|
|
Three Months Ended September 30, 2017
2
|
|
% of total
revenue
|
|
Increase
(decrease)
|
|
% Change
|
|||||||||
Revenues, net:
|
|
|
|
|
|
|
|||||||||||||||
North America
|
|
$
|
412.8
|
|
|
66.6
|
%
|
|
$
|
368.0
|
|
|
63.7
|
%
|
|
$
|
44.8
|
|
|
12.2
|
%
|
International
|
|
206.8
|
|
|
33.4
|
%
|
|
209.9
|
|
|
36.3
|
%
|
|
(3.1
|
)
|
|
(1.5
|
)%
|
|||
Total revenues, net
|
|
619.6
|
|
|
100.0
|
%
|
|
577.9
|
|
|
100.0
|
%
|
|
41.7
|
|
|
7.2
|
%
|
|||
Consolidated operating expenses:
|
|
|
|
|
|
|
|||||||||||||||
Merchant commissions
|
|
—
|
|
|
—
|
%
|
|
27.7
|
|
|
4.8
|
%
|
|
(27.7
|
)
|
|
(100.0
|
)%
|
|||
Processing
|
|
128.4
|
|
|
20.7
|
%
|
|
111.3
|
|
|
19.3
|
%
|
|
17.1
|
|
|
15.4
|
%
|
|||
Selling
|
|
44.8
|
|
|
7.2
|
%
|
|
45.1
|
|
|
7.8
|
%
|
|
(0.3
|
)
|
|
(0.6
|
)%
|
|||
General and administrative
|
|
98.0
|
|
|
15.8
|
%
|
|
92.1
|
|
|
15.9
|
%
|
|
6.0
|
|
|
6.5
|
%
|
|||
Depreciation and amortization
|
|
67.3
|
|
|
10.9
|
%
|
|
69.2
|
|
|
12.0
|
%
|
|
(1.9
|
)
|
|
(2.7
|
)%
|
|||
Operating income
|
|
281.1
|
|
|
45.4
|
%
|
|
232.6
|
|
|
40.3
|
%
|
|
48.5
|
|
|
20.8
|
%
|
|||
Investment loss
|
|
7.1
|
|
|
1.2
|
%
|
|
47.8
|
|
|
8.3
|
%
|
|
(40.6
|
)
|
|
(85.0
|
)%
|
|||
Other expense (income), net
|
|
0.3
|
|
|
—
|
%
|
|
(175.3
|
)
|
|
(30.3
|
)%
|
|
(175.6
|
)
|
|
NM
|
|
|||
Interest expense, net
|
|
36.1
|
|
|
5.8
|
%
|
|
29.3
|
|
|
5.1
|
%
|
|
6.7
|
|
|
22.9
|
%
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
%
|
|
3.3
|
|
|
0.6
|
%
|
|
(3.3
|
)
|
|
(100.0
|
)%
|
|||
Provision for income taxes
|
|
79.9
|
|
|
12.9
|
%
|
|
124.7
|
|
|
21.6
|
%
|
|
(44.8
|
)
|
|
(35.9
|
)%
|
|||
Net income
|
|
$
|
157.7
|
|
|
25.5
|
%
|
|
$
|
202.8
|
|
|
35.1
|
%
|
|
$
|
(45.1
|
)
|
|
(22.3
|
)%
|
Operating income for segments:
|
|
|
|
|
|
|
|||||||||||||||
North America
|
|
$
|
177.8
|
|
|
|
|
$
|
138.5
|
|
|
|
|
$
|
39.3
|
|
|
28.4
|
%
|
||
International
|
|
103.3
|
|
|
|
|
94.2
|
|
|
|
|
9.2
|
|
|
9.7
|
%
|
|||||
Operating income
|
|
$
|
281.1
|
|
|
|
|
$
|
232.6
|
|
|
|
|
$
|
48.5
|
|
|
20.8
|
%
|
||
Operating margin for segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
North America
|
|
43.1
|
%
|
|
|
|
37.6
|
%
|
|
|
|
5.4
|
%
|
|
|
||||||
International
|
|
50.0
|
%
|
|
|
|
44.9
|
%
|
|
|
|
5.1
|
%
|
|
|
||||||
Total
|
|
45.4
|
%
|
|
|
|
40.3
|
%
|
|
|
|
5.1
|
%
|
|
|
•
|
Organic growth of approximately 11% on a constant fuel price, fuel spread margin, foreign currency and acquisition and disposition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs. Organic revenue growth has been calculated assuming ASC 606 was implemented on January 1, 2017, in order to calculate organic growth using comparable revenue results in each period.
|
•
|
The impact of acquisitions during 2017, which contributed approximately $20 million in additional revenue.
|
•
|
Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our consolidated revenue for the three months ended
September 30, 2018
over the comparable period in
2017
of approximately
$9 million
. Foreign exchange rates had an unfavorable impact on consolidated revenues in the three months ended
September 30, 2018
over the comparable period in
2017
of approximately
$26 million
, primarily due to unfavorable changes in foreign exchange rates mostly in Brazil, partially offset by the favorable impact of higher fuel prices of approximately
$14 million
and favorable fuel spread margins of approximately
$3 million
, in the three months ended
September 30, 2018
over the comparable period in
2017
.
|
•
|
Organic growth of approximately 11%, on a constant fuel price, fuel spread margin and acquisition and disposition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs. Organic revenue growth has been calculated assuming ASC 606 was implemented on January 1, 2017, in order to calculate organic growth using comparable revenue results in each period.
|
•
|
The impact of our Cambridge and CLS acquisitions during 2017, which contributed approximately $18 million in additional revenue.
|
•
|
Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a positive impact on our North America segment revenue in three months ended
September 30, 2018
over the comparable period in
2017
of approximately
$14 million
, primarily due to the favorable impact of higher fuel prices of approximately
$11 million
and favorable fuel spread margins of approximately
$3 million
.
|
•
|
Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our International segment revenue for the three months ended
September 30, 2018
over the comparable period in
2017
of approximately
$23 million
. Unfavorable foreign exchange rates negatively impacted consolidated revenues by approximately
$25 million
primarily due to unfavorable changes in foreign exchange rates mostly in Brazil, partially offset by the favorable impact of higher fuel prices on consolidated revenues of approximately
$3 million
.
|
•
|
Organic growth of approximately 11% on a constant fuel price, fuel spread margin and acquisition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs. Organic revenue growth has been calculated assuming ASC 606 was implemented in January 2017 in order to calculate organic growth using a consistent revenue standard in both periods.
|
•
|
The impact of a small fuel card acquisition during 2017, which contributed approximately $2 million in additional revenue.
|
|
|
Three Months Ended September 30,
|
||||||||||||
Revenue, net by Geography*
|
|
2018¹
|
|
2017
|
||||||||||
(Unaudited)
|
|
Revenues, net
|
|
% of total
revenues, net
|
|
Revenues, net
|
|
% of total
revenues, net
|
||||||
United States
|
|
$
|
391
|
|
|
63
|
%
|
|
$
|
358
|
|
|
62
|
%
|
Brazil
|
|
92
|
|
|
15
|
%
|
|
101
|
|
|
17
|
%
|
||
United Kingdom
|
|
63
|
|
|
10
|
%
|
|
61
|
|
|
11
|
%
|
||
Other
|
|
74
|
|
|
12
|
%
|
|
58
|
|
|
10
|
%
|
||
Consolidated revenues, net
|
|
$
|
620
|
|
|
100
|
%
|
|
$
|
578
|
|
|
100
|
%
|
|
|
Three Months Ended September 30,
|
||||||||||||
Revenue, net by Product Category*
|
|
2018¹
|
|
2017
|
||||||||||
(Unaudited)
|
|
Revenues,
net
|
|
% of total revenues, net
|
|
Revenues,
net
|
|
% of total
revenues, net
|
||||||
Fuel
|
|
$
|
276
|
|
|
45
|
%
|
|
$
|
276
|
|
|
48
|
%
|
Corporate Payments
|
|
105
|
|
|
17
|
%
|
|
72
|
|
|
12
|
%
|
||
Tolls
|
|
78
|
|
|
13
|
%
|
|
83
|
|
|
14
|
%
|
||
Lodging
|
|
48
|
|
|
8
|
%
|
|
33
|
|
|
6
|
%
|
||
Gift
|
|
57
|
|
|
9
|
%
|
|
55
|
|
|
9
|
%
|
||
Other
|
|
56
|
|
|
9
|
%
|
|
59
|
|
|
10
|
%
|
||
Consolidated revenues, net
|
|
$
|
620
|
|
|
100
|
%
|
|
$
|
578
|
|
|
100
|
%
|
Major Sources of Revenue, net
*
|
|
Three Months Ended September 30,
|
||||||||||||
(Unaudited)
|
|
2018¹
|
|
%
|
|
2017
|
|
%
|
||||||
Processing and Program Revenue
2
|
|
$
|
322
|
|
|
52
|
%
|
|
$
|
288
|
|
|
50
|
%
|
Late Fees and Finance Charges
3
|
|
38
|
|
|
6
|
%
|
|
34
|
|
|
6
|
%
|
||
Miscellaneous Fees
4
|
|
39
|
|
|
6
|
%
|
|
32
|
|
|
5
|
%
|
||
Discount Revenue (Fuel)
5
|
|
87
|
|
|
14
|
%
|
|
77
|
|
|
13
|
%
|
||
Discount Revenue (NonFuel)
6
|
|
51
|
|
|
8
|
%
|
|
45
|
|
|
8
|
%
|
||
Tied to Fuel-Price Spreads
7
|
|
31
|
|
|
5
|
%
|
|
53
|
|
|
9
|
%
|
||
Merchant Program Revenue
8
|
|
53
|
|
|
9
|
%
|
|
49
|
|
|
8
|
%
|
||
Consolidated revenues, net
|
|
$
|
620
|
|
|
100
|
%
|
|
$
|
578
|
|
|
100
|
%
|
1
Reflects the impact of the Company's adoption of ASC 606 and related cost capitalization guidance, which was adopted by the Company on January 1, 2018 using the modified retrospective transition method. The adoption of ASC 606 resulted in an adjustment to retained earnings in our consolidated balance sheet for the cumulative effect of applying the standard, which included costs incurred to obtain a contract, as well as presentation changes in our statements of income, including the classification of certain amounts previously classified as merchant commissions and processing expense net with revenues. As a result of the application of the modified retrospective transition method, the Company's prior period results within its annual report on Form 10-K and quarterly reports on Form 10-Q will not be restated to reflect the impact of ASC 606.
|
2
Includes revenue from customers based on accounts, cards, devices, transactions, load amounts and/or purchase amounts, etc. for participation in our various fleet and workforce related programs, as well as revenue from partners (e.g., major retailers, leasing companies, oil companies, petroleum marketers, etc.) for processing and network management services. Primarily represents revenue from North American trucking, lodging, prepaid benefits, telematics, gift cards and toll related businesses.
|
3
Fees for late payment and interest charges for carrying a balance charged to a customer.
|
4
Non-standard fees charged to customers based on customer behavior or optional participation, primarily including high credit risk surcharges, over credit limit charges, minimum processing fees, printing and mailing fees, etc.
|
5
Interchange revenue directly influenced by the absolute price of fuel and other interchange related to fuel products.
|
6
Interchange revenue related to nonfuel products.
|
7
Revenue derived from the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction.
|
8
Revenue derived primarily from the sale of equipment, software and related maintenance to merchants.
|
* We may not be able to precisely calculate revenue by source, as certain estimates were made in these allocations. Columns may not calculate due to rounding.
|
(Unaudited)
|
|
Nine Months Ended September 30, 2018
1
|
|
% of total
revenue
|
|
Nine Months Ended September 30, 2017
2
|
|
% of total
revenue
|
|
Increase
(decrease)
|
|
% Change
|
|||||||||
Revenues, net:
|
|
|
|
|
|
|
|||||||||||||||
North America
|
|
$
|
1,148.0
|
|
|
64.1
|
%
|
|
$
|
1,040.9
|
|
|
63.5
|
%
|
|
$
|
107.1
|
|
|
10.3
|
%
|
International
|
|
642.0
|
|
|
35.9
|
%
|
|
598.6
|
|
|
36.5
|
%
|
|
43.4
|
|
|
7.3
|
%
|
|||
Total revenues, net
|
|
1,790.1
|
|
|
100.0
|
%
|
|
1,639.5
|
|
|
100.0
|
%
|
|
150.5
|
|
|
9.2
|
%
|
|||
Consolidated operating expenses:
|
|
|
|
|
|
|
|||||||||||||||
Merchant commissions
|
|
—
|
|
|
—
|
%
|
|
82.7
|
|
|
5.0
|
%
|
|
(82.7
|
)
|
|
(100.0
|
)%
|
|||
Processing
|
|
356.1
|
|
|
19.9
|
%
|
|
316.4
|
|
|
19.3
|
%
|
|
39.7
|
|
|
12.5
|
%
|
|||
Selling
|
|
135.9
|
|
|
7.6
|
%
|
|
122.9
|
|
|
7.5
|
%
|
|
13.1
|
|
|
10.6
|
%
|
|||
General and administrative
|
|
284.7
|
|
|
15.9
|
%
|
|
275.1
|
|
|
16.8
|
%
|
|
9.6
|
|
|
3.5
|
%
|
|||
Depreciation and amortization
|
|
207.4
|
|
|
11.6
|
%
|
|
198.7
|
|
|
12.1
|
%
|
|
8.6
|
|
|
4.4
|
%
|
|||
Operating income
|
|
806.0
|
|
|
45.0
|
%
|
|
643.7
|
|
|
39.3
|
%
|
|
162.2
|
|
|
25.2
|
%
|
|||
Investment loss
|
|
7.1
|
|
|
0.4
|
%
|
|
52.5
|
|
|
3.2
|
%
|
|
(45.4
|
)
|
|
(86.4
|
)%
|
|||
Other expense (income), net
|
|
0.5
|
|
|
—
|
%
|
|
(173.6
|
)
|
|
(10.6
|
)%
|
|
174.1
|
|
|
NM
|
|
|||
Interest expense, net
|
|
100.3
|
|
|
5.6
|
%
|
|
76.3
|
|
|
4.7
|
%
|
|
24.0
|
|
|
31.4
|
%
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
%
|
|
3.3
|
|
|
0.2
|
%
|
|
(3.3
|
)
|
|
(100.0
|
)%
|
|||
Provision for income taxes
|
|
188.6
|
|
|
10.5
|
%
|
|
227.8
|
|
|
13.9
|
%
|
|
(39.2
|
)
|
|
(17.2
|
)%
|
|||
Net income
|
|
$
|
509.5
|
|
|
28.5
|
%
|
|
$
|
457.5
|
|
|
27.9
|
%
|
|
$
|
52.0
|
|
|
11.4
|
%
|
Operating income for segments:
|
|
|
|
|
|
|
|||||||||||||||
North America
|
|
$
|
495.1
|
|
|
|
|
$
|
394.4
|
|
|
|
|
$
|
100.7
|
|
|
25.5
|
%
|
||
International
|
|
310.9
|
|
|
|
|
249.4
|
|
|
|
|
61.5
|
|
|
24.7
|
%
|
|||||
Operating income
|
|
$
|
806.0
|
|
|
|
|
$
|
643.7
|
|
|
|
|
$
|
162.2
|
|
|
25.2
|
%
|
||
Operating margin for segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
North America
|
|
43.1
|
%
|
|
|
|
37.9
|
%
|
|
|
|
5.2
|
%
|
|
|
||||||
International
|
|
48.4
|
%
|
|
|
|
41.7
|
%
|
|
|
|
6.8
|
%
|
|
|
||||||
Total
|
|
45.0
|
%
|
|
|
|
39.3
|
%
|
|
|
|
5.8
|
%
|
|
|
•
|
Organic growth of approximately 10% on a constant fuel price, fuel spread margin, foreign currency and acquisition, and disposition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs. Organic revenue growth has been calculated assuming ASC 606 was implemented on January 1, 2017, in order to calculate organic growth using comparable revenue results in each period.
|
•
|
The impact of acquisitions during 2017, which contributed approximately $96 million in additional revenue.
|
•
|
Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a favorable impact on our consolidated revenue for the
nine
months ended
September 30, 2018
over the comparable period in
2017
of approximately
$7 million
. We believe the higher fuel priced, had a favorable impact on consolidated revenues in the
nine
months ended
September 30, 2018
over the comparable period in
2017
of approximately
$36 million
. Conversely, foreign exchange rates and fuel spread margins had an unfavorable impact on consolidated revenues in the
nine
months ended
September 30, 2018
compared to the comparable period in
2017
of approximately
$25 million
and
$4 million
, respectively.
|
•
|
Organic growth of approximately 9%, on a constant fuel price, fuel spread margin and acquisition and disposition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs. Organic revenue growth has been calculated assuming ASC 606 was implemented on January 1, 2017, in order to calculate organic growth using comparable revenue results in each period.
|
•
|
The impact of our Cambridge and CLS acquisitions during 2017, which contributed approximately $90 million in additional revenue.
|
•
|
Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a positive impact on our North America segment revenue in the
nine
month period ended
September 30, 2018
over the comparable period in
2017
of approximately
$27 million
, primarily due to the favorable impact of higher fuel prices of approximately
$31 million
, partially offset by lower fuel spread margins of approximately
$4 million
.
|
•
|
Organic growth of approximately 12% on a constant fuel price, fuel spread margin and acquisition basis, driven by increases in both volume and revenue per transaction in certain of our payment programs. Organic revenue growth has been calculated assuming ASC 606 was implemented in January 2017 in order to calculate organic growth using a consistent revenue standard in both periods.
|
•
|
Although we cannot precisely measure the impact of the macroeconomic environment, in total we believe it had a negative impact on our International segment revenue for the
nine
months ended
September 30, 2018
over the comparable period in
2017
of approximately
$20 million
. Changes in foreign exchange rates had an unfavorable impact on consolidated revenues of approximately
$25 million
, partially offset by the favorable impact of higher fuel prices of approximately
$5 million
.
|
•
|
The impact of a small fuel card acquisition during 2017, which contributed approximately $7 million in additional revenue.
|
|
|
Nine Months Ended September 30,
|
||||||||||||
Revenue, net by Geography*
|
|
2018¹
|
|
2017
|
||||||||||
(Unaudited)
|
|
Revenues, net
|
|
% of total
revenues, net
|
|
Revenues, net
|
|
% of total
revenues, net
|
||||||
United States
|
|
$
|
1,082
|
|
|
60
|
%
|
|
$
|
1,031
|
|
|
63
|
%
|
Brazil
|
|
296
|
|
|
17
|
%
|
|
287
|
|
|
17
|
%
|
||
United Kingdom
|
|
192
|
|
|
11
|
%
|
|
174
|
|
|
11
|
%
|
||
Other
|
|
220
|
|
|
12
|
%
|
|
148
|
|
|
9
|
%
|
||
Consolidated revenues, net
|
|
$
|
1,790
|
|
|
100
|
%
|
|
$
|
1,640
|
|
|
100
|
%
|
|
|
Nine Months Ended September 30,
|
||||||||||||
Revenue, net by Product Category*
|
|
2018¹
|
|
2017
|
||||||||||
(Unaudited)
|
|
Revenues,
net
|
|
% of total revenues, net
|
|
Revenues,
net
|
|
% of total
revenues, net
|
||||||
Fuel cards
|
|
$
|
805
|
|
|
45
|
%
|
|
$
|
815
|
|
|
50
|
%
|
Corporate Payments
|
|
300
|
|
|
17
|
%
|
|
150
|
|
|
9
|
%
|
||
Tolls
|
|
250
|
|
|
14
|
%
|
|
236
|
|
|
14
|
%
|
||
Lodging
|
|
132
|
|
|
7
|
%
|
|
86
|
|
|
5
|
%
|
||
Gift
|
|
139
|
|
|
8
|
%
|
|
144
|
|
|
9
|
%
|
||
Other
|
|
164
|
|
|
9
|
%
|
|
209
|
|
|
13
|
%
|
||
Consolidated revenues, net
|
|
$
|
1,790
|
|
|
100
|
%
|
|
$
|
1,640
|
|
|
100
|
%
|
Major Sources of Revenue, net
*
|
|
Nine Months Ended September 30,
|
||||||||||||
(Unaudited)
|
|
2018¹
|
|
% of total
revenues, net
|
|
2017
|
|
% of total
revenues, net
|
||||||
Processing and Program Revenue
2
|
|
$
|
932
|
|
|
52
|
%
|
|
$
|
781
|
|
|
48
|
%
|
Late Fees and Finance Charges
3
|
|
109
|
|
|
6
|
%
|
|
105
|
|
|
6
|
%
|
||
Miscellaneous Fees
4
|
|
113
|
|
|
6
|
%
|
|
97
|
|
|
6
|
%
|
||
Discount Revenue (Fuel)
5
|
|
257
|
|
|
14
|
%
|
|
223
|
|
|
14
|
%
|
||
Discount Revenue (NonFuel)
6
|
|
139
|
|
|
8
|
%
|
|
130
|
|
|
8
|
%
|
||
Tied to Fuel-Price Spreads
7
|
|
86
|
|
|
5
|
%
|
|
165
|
|
|
10
|
%
|
||
Merchant Program Revenue
8
|
|
154
|
|
|
9
|
%
|
|
139
|
|
|
8
|
%
|
||
Consolidated revenues, net
|
|
$
|
1,790
|
|
|
100
|
%
|
|
$
|
1,640
|
|
|
100
|
%
|
1
Reflects the impact of the Company's adoption of ASC 606 and related cost capitalization guidance, which was adopted by the Company on January 1, 2018 using the modified retrospective transition method. The adoption of ASC 606 resulted in an adjustment to retained earnings in our consolidated balance sheet for the cumulative effect of applying the standard, which included costs incurred to obtain a contract, as well as presentation changes in our statements of income, including the classification of certain amounts previously classified as merchant commissions and processing expense net with revenues. As a result of the application of the modified retrospective transition method, the Company's prior period results within its annual report on Form 10-K and quarterly reports on Form 10-Q will not be restated to reflect the impact of ASC 606.
|
2
Includes revenue from customers based on accounts, cards, devices, transactions, load amounts and/or purchase amounts, etc. for participation in our various fleet and workforce related programs, as well as revenue from partners (e.g., major retailers, leasing companies, oil companies, petroleum marketers, etc.) for processing and network management services. Primarily represents revenue from North American trucking, lodging, prepaid benefits, telematics, gift cards and toll related businesses.
|
3
Fees for late payment and interest charges for carrying a balance charged to a customer.
|
4
Non-standard fees charged to customers based on customer behavior or optional participation, primarily including high credit risk surcharges, over credit limit charges, minimum processing fees, printing and mailing fees, etc.
|
5
Interchange revenue directly influenced by the absolute price of fuel and other interchange related to fuel products.
|
6
Interchange revenue related to nonfuel products.
|
7
Revenue derived from the difference between the price charged to a fleet customer for a transaction and the price paid to the merchant for the same transaction.
|
8
Revenue derived primarily from the sale of equipment, software and related maintenance to merchants.
|
* We may not be able to precisely calculate revenue by source, as certain estimates were made in these allocations. Columns may not calculate due to rounding.
|
|
|
Nine Months Ended September 30,
|
||||||
(Unaudited)
|
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
|
$
|
555.4
|
|
|
$
|
431.6
|
|
Net cash used in investing activities
|
|
(71.3
|
)
|
|
(341.6
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(356.3
|
)
|
|
250.1
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
157,694
|
|
|
$
|
202,823
|
|
|
$
|
509,483
|
|
|
$
|
457,503
|
|
Stock based compensation
|
|
20,702
|
|
|
24,654
|
|
|
54,207
|
|
|
68,897
|
|
||||
Amortization of intangible assets, premium on receivables, deferred financing costs and discounts
|
|
55,482
|
|
|
60,229
|
|
|
173,239
|
|
|
177,387
|
|
||||
Impairment of investment
|
|
7,147
|
|
|
44,600
|
|
|
7,147
|
|
|
44,600
|
|
||||
Net gain on disposition of business
|
|
—
|
|
|
(109,205
|
)
|
|
—
|
|
|
(109,205
|
)
|
||||
Loss on extinguishment of debt
|
|
—
|
|
|
3,296
|
|
|
—
|
|
|
3,296
|
|
||||
Non recurring loss due to merger of entities
|
|
—
|
|
|
2,028
|
|
|
—
|
|
|
2,028
|
|
||||
Restructuring costs
|
|
481
|
|
|
—
|
|
|
3,917
|
|
|
—
|
|
||||
Unauthorized access impact
|
|
322
|
|
|
—
|
|
|
2,065
|
|
|
—
|
|
||||
Total pre-tax adjustments
|
|
84,134
|
|
|
25,602
|
|
|
240,575
|
|
|
187,003
|
|
||||
Income tax impact of pre-tax adjustments at the effective tax rate
1
|
|
(17,977
|
)
|
|
(25,656
|
)
|
|
(54,904
|
)
|
|
(69,711
|
)
|
||||
Impact of tax reform
|
|
22,731
|
|
|
—
|
|
|
22,731
|
|
|
—
|
|
||||
Adjusted net income
|
|
$
|
246,582
|
|
|
$
|
202,769
|
|
|
$
|
717,885
|
|
|
$
|
574,795
|
|
Adjusted net income per diluted share
|
|
$
|
2.68
|
|
|
$
|
2.18
|
|
|
$
|
7.75
|
|
|
$
|
6.12
|
|
Diluted shares
|
|
92,081
|
|
|
93,001
|
|
|
92,671
|
|
|
93,923
|
|
1
Excludes the results of the Company's investments on our effective tax rate, as results from our investments are reported within the consolidated statements of income on a post-tax basis and no tax-over-book outside basis differences related to our investments reversed during 2017. Excludes impact of tax reform adjustments during the period included in our effective tax rate. Also excludes the net gain realized upon our disposition of Nextraq, representing a pretax gain of $175.0 million and tax on gain of $65.8 million. The tax on the gain is included in "Net gain on disposition of business".
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
|
|
|
Exhibit
No.
|
|
|
|
Acquisition agreement to acquire Serviços e Tecnologia de Pagamentos S.A. (incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K, File No. 001-35004, filed with the Securities and Exchange Commission ("SEC") on March 18, 2016)
|
|
|
|
|
|
Amended and Restated Certificate of Incorporation of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K, File No. 001-35004, filed with the SEC on March 25, 2011)
|
|
|
|
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, File No. 001-35004, file with the SEC on June 8, 2018)
|
|
|
|
|
|
Amended and Restated Bylaws of FleetCor Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 8-K, File No. 001-35004, filed with the SEC on January 29, 2018)
|
|
|
|
|
|
Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1, File No. 333-166092, filed with the SEC on June 29, 2010)
|
|
|
|
|
10.2
*
|
|
Fourth Amendment to Credit Agreement, dated August 30, 2018, among FleetCor Technologies Operating Company, LLC, FleetCor Technologies Operating Company, LLC, FleetCor Technologies, Inc., the designated borrowers party thereto, Cambridge Mercantile Corp. (U.S.A.), the other guarantors party thereto, Bank of America, N.A., as administrative agent, swing line lender and l/c issuer, and the other lenders party thereto
|
|
|
|
10.3
*
|
|
Fourth Amendment to Fifth Amended and Restated Receivables Purchase Agreement, dated August 30, 2018, by and among FleetCor Funding LLC, FleetCor Technologies Operating Company, LLC, PNC Bank, National Association as administrator for a group of purchasers and purchaser agents, and certain other parties thereto
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended
|
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001
|
|
|
|
|
101
|
|
The following financial information for the Registrant formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income; (iv) the Unaudited Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
FleetCor Technologies, Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
||
Signature
|
|
|
|
Title
|
|
|
|
||
/s/ Ronald F. Clarke
|
|
|
|
President, Chief Executive Officer and Chairman of the Board of Directors (Duly Authorized Officer and Principal
Executive Officer)
|
Ronald F. Clarke
|
|
|
|
|
|
|
|
||
/s/ Eric R. Dey
|
|
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
Eric R. Dey
|
|
|
|
1 Year FleetCor Technologies Chart |
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